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Prize sharing in collective contests

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  • Nitzan, Shmuel
  • Ueda, Kaoru

Abstract

The characteristics of endogenously determined sharing rules and the group-size paradox are studied in a model of group contest with the following features: (i) The prize has mixed private-public good characteristics. (ii) Groups can differ in marginal cost of effort and their membership size. (iii) In each group the members decide how much effort to put without observing the sharing rules of the other groups. It is shown that endogenous determination of group sharing rules completely eliminates the group-size paradox, i.e. a larger group always attains a higher winning probability than a smaller group, unless the prize is purely private. In addition, an interesting pattern of equilibrium group sharing rules is revealed: The group attaining the lower winning probability is the one choosing the rule giving higher incentives to the members.

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Bibliographic Info

Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 55 (2011)
Issue (Month): 5 (June)
Pages: 678-687

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Handle: RePEc:eee:eecrev:v:55:y:2011:i:5:p:678-687

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Web page: http://www.elsevier.com/locate/eer

Related research

Keywords: Collective contest Mixed public-good prize Endogenous sharing rules The group-size paradox;

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References

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  13. Kaoru Ueda, 2002. "Oligopolization in collective rent-seeking," Social Choice and Welfare, Springer, vol. 19(3), pages 613-626.
  14. Lee, Sanghack, 1995. " Endogenous Sharing Rules in Collective-Group Rent-Seeking," Public Choice, Springer, vol. 85(1-2), pages 31-44, October.
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Citations

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Cited by:
  1. Heinrich Ursprung, 2011. "The Evolution of Sharing Rules in Rent Seeking Contests: Incentives Crowd Out Cooperation," Working Paper Series of the Department of Economics, University of Konstanz 2011-02, Department of Economics, University of Konstanz.
  2. Shmuel Nitzan & Kaoru Ueda, 2013. "Intra-Group Heterogeneity in Collective Contests," CESifo Working Paper Series 4096, CESifo Group Munich.
  3. Jingjing Zhang, 2012. "Communication in asymmetric group competition over public goods," ECON - Working Papers 069, Department of Economics - University of Zurich.
  4. David K Levine & Salvatore Modica, 2013. "Peer Discipline and the Strength of Organizations," Levine's Bibliography 786969000000000713, UCLA Department of Economics.
  5. Shmuel Nitzan & Kaoru Ueda, 2014. "Cost Sharing in Collective Contests," CESifo Working Paper Series 4825, CESifo Group Munich.
  6. Junichiro Ishida, 2013. "Multilayered Tournaments," ISER Discussion Paper 0879, Institute of Social and Economic Research, Osaka University.

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